Offshore Financial Centre institutions in small jurisdictions in a globalised world: an empirical study of Vanuatu

Tiru Jayaraman () and Chee-Keong Choong

International Journal of Economic Policy in Emerging Economies, 2010, vol. 3, issue 2, 129-146

Abstract: Capital mobility and absence of direct taxation have made Vanuatu, an attractive Offshore Financial Centre (OFC) in the Pacific, since its independence in 1980. Consequently, Vanuatu has been depending on trade taxes. As Vanuatu would become part of a Pacific free trade area by 2015, policy makers are exploring new sources of tax revenue. An empirical investigation undertaken in this study shows that contribution of OFC institutions to Vanuatu's growth since its independence in 1980 was negligible and insignificant. The paper points out to the direction that Vanuatu has to move and overcome its reluctance to introduce direct taxation.

Keywords: OFC; offshore financial centres; financial development; economic development; cointegration; causality; Vanuatu; capital mobility; direct taxation; trade taxes; Pacific free trade area; tax revenues; economic growth; emerging economies. (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijepee:v:3:y:2010:i:2:p:129-146

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